Answer :
Certainly! Let's prepare a detailed departmental profit and loss account for departments A and B of Popular Sales International using the given information.
### Step-by-Step Solution:
#### 1. Gross Profit Allocation:
- Dept. A: ₹10,50,000
- Dept. B: ₹6,40,000
#### 2. Allocate Expenses:
##### a. Salaries Allocation:
- Total Salaries = ₹2,00,000
- Allocation based on the number of employees in each department:
- Total Employees = 60 (Dept. A) + 40 (Dept. B) = 100
- Salaries for Dept. A: [tex]\(\left(\frac{60}{100}\right) \times 200,000 = 120,000\)[/tex]
- Salaries for Dept. B: [tex]\(\left(\frac{40}{100}\right) \times 200,000 = 80,000\)[/tex]
##### b. Rent and Rates Allocation:
- Total Rent and Rates = ₹1,02,000
- Allocation based on floor area occupied by each department:
- Total Floor Area = 800 sq. ft. (Dept. A) + 400 sq. ft. (Dept. B) = 1,200 sq. ft.
- Rent and Rates for Dept. A: [tex]\(\left(\frac{800}{1200}\right) \times 102,000 = 68,000\)[/tex]
- Rent and Rates for Dept. B: [tex]\(\left(\frac{400}{1200}\right) \times 102,000 = 34,000\)[/tex]
##### c. Depreciation Allocation:
- Total Depreciation = ₹1,20,000
- Allocation based on the value of assets in each department:
- Total Value of Assets = ₹4,50,000 (Dept. A) + ₹1,50,000 (Dept. B) = ₹6,00,000
- Depreciation for Dept. A: [tex]\(\left(\frac{4,50,000}{6,00,000}\right) \times 120,000 = 90,000\)[/tex]
- Depreciation for Dept. B: [tex]\(\left(\frac{1,50,000}{6,00,000}\right) \times 120,000 = 30,000\)[/tex]
#### 3. Total Expenses of Each Department:
- Dept. A:
- Salaries = ₹1,20,000
- Rent and Rates = ₹68,000
- Depreciation = ₹90,000
- Total Expenses for Dept. A = 1,20,000 + 68,000 + 90,000 = ₹2,78,000
- Dept. B:
- Salaries = ₹80,000
- Rent and Rates = ₹34,000
- Depreciation = ₹30,000
- Total Expenses for Dept. B = 80,000 + 34,000 + 30,000 = ₹1,44,000
#### 4. Net Profit Calculation:
- Dept. A:
- Gross Profit of Dept. A = ₹10,50,000
- Total Expenses of Dept. A = ₹2,78,000
- Net Profit of Dept. A = Gross Profit - Total Expenses
- Net Profit of Dept. A = 10,50,000 - 2,78,000 = ₹7,72,000
- Dept. B:
- Gross Profit of Dept. B = ₹6,40,000
- Total Expenses of Dept. B = ₹1,44,000
- Net Profit of Dept. B = Gross Profit - Total Expenses
- Net Profit of Dept. B = 6,40,000 - 1,44,000 = ₹4,96,000
#### 5. Departmental Profit and Loss Account:
| Particulars | Dept. A | Dept. B |
|---------------------------|------------|------------|
| Gross Profit | ₹10,50,000 | ₹6,40,000 |
| Less: Salaries | ₹1,20,000 | ₹80,000 |
| Less: Rent and Rates | ₹68,000 | ₹34,000 |
| Less: Depreciation | ₹90,000 | ₹30,000 |
| Total Expenses | ₹2,78,000 | ₹1,44,000 |
| Net Profit | ₹7,72,000 | ₹4,96,000 |
Thus, the departmental profit and loss account for departments A and B of Popular Sales International is prepared as shown above.
### Step-by-Step Solution:
#### 1. Gross Profit Allocation:
- Dept. A: ₹10,50,000
- Dept. B: ₹6,40,000
#### 2. Allocate Expenses:
##### a. Salaries Allocation:
- Total Salaries = ₹2,00,000
- Allocation based on the number of employees in each department:
- Total Employees = 60 (Dept. A) + 40 (Dept. B) = 100
- Salaries for Dept. A: [tex]\(\left(\frac{60}{100}\right) \times 200,000 = 120,000\)[/tex]
- Salaries for Dept. B: [tex]\(\left(\frac{40}{100}\right) \times 200,000 = 80,000\)[/tex]
##### b. Rent and Rates Allocation:
- Total Rent and Rates = ₹1,02,000
- Allocation based on floor area occupied by each department:
- Total Floor Area = 800 sq. ft. (Dept. A) + 400 sq. ft. (Dept. B) = 1,200 sq. ft.
- Rent and Rates for Dept. A: [tex]\(\left(\frac{800}{1200}\right) \times 102,000 = 68,000\)[/tex]
- Rent and Rates for Dept. B: [tex]\(\left(\frac{400}{1200}\right) \times 102,000 = 34,000\)[/tex]
##### c. Depreciation Allocation:
- Total Depreciation = ₹1,20,000
- Allocation based on the value of assets in each department:
- Total Value of Assets = ₹4,50,000 (Dept. A) + ₹1,50,000 (Dept. B) = ₹6,00,000
- Depreciation for Dept. A: [tex]\(\left(\frac{4,50,000}{6,00,000}\right) \times 120,000 = 90,000\)[/tex]
- Depreciation for Dept. B: [tex]\(\left(\frac{1,50,000}{6,00,000}\right) \times 120,000 = 30,000\)[/tex]
#### 3. Total Expenses of Each Department:
- Dept. A:
- Salaries = ₹1,20,000
- Rent and Rates = ₹68,000
- Depreciation = ₹90,000
- Total Expenses for Dept. A = 1,20,000 + 68,000 + 90,000 = ₹2,78,000
- Dept. B:
- Salaries = ₹80,000
- Rent and Rates = ₹34,000
- Depreciation = ₹30,000
- Total Expenses for Dept. B = 80,000 + 34,000 + 30,000 = ₹1,44,000
#### 4. Net Profit Calculation:
- Dept. A:
- Gross Profit of Dept. A = ₹10,50,000
- Total Expenses of Dept. A = ₹2,78,000
- Net Profit of Dept. A = Gross Profit - Total Expenses
- Net Profit of Dept. A = 10,50,000 - 2,78,000 = ₹7,72,000
- Dept. B:
- Gross Profit of Dept. B = ₹6,40,000
- Total Expenses of Dept. B = ₹1,44,000
- Net Profit of Dept. B = Gross Profit - Total Expenses
- Net Profit of Dept. B = 6,40,000 - 1,44,000 = ₹4,96,000
#### 5. Departmental Profit and Loss Account:
| Particulars | Dept. A | Dept. B |
|---------------------------|------------|------------|
| Gross Profit | ₹10,50,000 | ₹6,40,000 |
| Less: Salaries | ₹1,20,000 | ₹80,000 |
| Less: Rent and Rates | ₹68,000 | ₹34,000 |
| Less: Depreciation | ₹90,000 | ₹30,000 |
| Total Expenses | ₹2,78,000 | ₹1,44,000 |
| Net Profit | ₹7,72,000 | ₹4,96,000 |
Thus, the departmental profit and loss account for departments A and B of Popular Sales International is prepared as shown above.
